Why Sony needs to be flexible on PS Vita download pricing

Sony is trying to make downloadable Vita games more appealing by pricing them …

Sony could make help make these cards a thing of the past with a more aggressive pricing scheme for downloadable Vita games.

Photograph by Kyle Orland

As the game industry manages the awkward transition from a focus on retail distribution to a focus on purely downloadable titles, Sony seems to have come up with an interesting compromise position for its new handheld, Vita. The company has promised that any retail game for the system will also be available for download from the PlayStation Store, and usually at a price roughly ten percent less than the suggested retail price. (Titles like EA's FIFA Soccer, Sega's Virtua Tennis 4 and Ultimate Marvel vs. Capcom 3 are currently showing up at the same price for download or retail purchase, however.)

At first glance, this seems like a great way to gently encourage players to purchase from Sony's online store, a boon for publishers that often hate to see their games resold on the secondhand market. But that encouragement is based on a price advantage that might be hard to maintain over real-world brick-and-mortar stores in the long run.

British bargains

Take a look at the situation in England. British price tracking site Savygamer took a look at the best available retail prices for the Vita's launch lineup, and found that they ran about 17 percent less than the "discounted" PSN prices for those same games. Sometimes the retail price advantage was just a few pennies, but an intrepid British shopper could save over £10 (almost $16) on titles like Virtua Tennis 4, Shinobido 2, or F1 2011 by shopping around at retail rather than downloading.

Hidden costs and bargain bins

Don't forget, too, that if you want to download Vita games you have to purchase one of Sony's costly, proprietary Vita memory cards, which cost up to $100 for a 32GB card (per-gigabyte prices are even more expensive for smaller cards). For a 3.2GB download like Golden Abyss, that translates to a hidden cost of about $10 spent on permanent digital storage (of course, unsentimental gamers could probably get by with a smaller memory card, deleting and re-downloading digital games as necessary).

And this is just how things stand before the Vita officially launches tomorrow (preorders went out starting last week). After launch, the retail Vita software market will likely be flooded with cheaper used copies, as well as bargain-bin clearances for less-popular titles. A downloadable version that sells for ten percent less than MSRP will find it hard to compete with a retail copy that has had its price slashed by 50 percent just one month after release. Plus, that retail copy retains some value if you decide to trade it in once you're done, which isn't even an option for a downloadable title.

Staying competitive

The question, then, is whether Sony and game publishers will allow downloadable Vita game prices to fluctuate in order to keep pace with their retail competition. The pricing history for retail PS3 games that are also available on the PlayStation Store isn't encouraging in this regard. While you can currently download older PS3 titles like Grand Theft Auto IV and Tom Clancy's Splinter Cell: Double Agent for a relatively competitive $20, games released in the last 12 months are often much more expensive to download than to buy new on disc.

The PlayStation Store is charging $60 for last May's Motorstorm: Apocalypse, for instance, while Amazon has the game disc for a cool $36.79. August's Madden NFL 12 will also run you $60 on the PlayStation Store, but only $43 on Amazon. The PS3 version of March's Crysis 2 costs $40 on PSN, but less than $20 from online retailers. Sure, you don't have to leave the couch to grab these downloadable options, but how much is that convenience really worth? (I should note here that downloadable Vita games are always ready to play without the need to futz with a stack of game cards, a decent selling point in favor of the PlayStation Store versions).

One of the major advantages digital distribution has over retail is the ability to fine tune prices to precisely suit demand for a title. With almost no marginal cost to selling an additional downloadable copy, companies can maximize profits by quickly lowering the price to an equilibrium that attracts the largest amount of revenue from the potential audience.

You see this phenomenon on the iOS App Store, where a "race to the bottom" effect has led to success for many cheap, high-quality titles, and on Steam, where frequent sales and classic bundle deals fill up many a download queue. Sony should follow the leads of these services if it wants its PlayStation Store to truly be a competitive alternative to its own retail titles.

Sony and MS are looking more and more out of their element competing with Apple and Amazon. They're used to relying on and protecting retailers not competing with them. The XBLA store is a good example of this: the full downloadable titles are always pricier than other outlets. They make you pay for convenience, even though you can't resell them.

The dumb thing is they could probably undercut most of these retail bargains by a fair amount and still end up making more money per copy with the downloadable versions (since a large percentage amount the retail cost is due to packaging and distribution of the physical copies).

Like the stupidly designed method for inserting a game into the PSVITA. Its a total pain in the ass. Did they really have to make it one of those stupid caps held on by pieces of rubber? I mean this is fine for things like the GSM SIM that you well... never take out. Or the video out port. Or even the memory card. Hell the port that I would thing needs the most covering DOES NOT HAVE ONE! The power connector!

What's to stop Sony from implementing a write once block on the physical games you buy at a retailer tying them to your Vita or your PSN account to kill off used games? It wouldn't be hard for them to do, and than it makes the downloadable games more competitive for them. Otherwise paying more for a game you can't resell or trade in makes no sense, downloading a 3.2gig game isn't going to be that convenient for a number of users, especially when you need a $100 card to load them on.

There's also the fact that a lot of game companies don't really care that PSN exists - they just plop the game up for MSRP and then that's where it stays for the rest of eternity. Aksys for example is notorious for doing this with their games, as is Atlus on some occasions(Persona).

It's not going to be able to compete with competitive pricing at all if the developers/publishers don't even care about competing.

The ability to get better sales from retail stores (and used games) is going to keep physical media alive, until every game comes with a non-transferable DRM code (or if you prefer "single player offline season pass").

For a 3.2GB download like Golden Abyss, that translates to a hidden cost of about $10 spent on permanent digital storage (of course, unsentimental gamers could probably get by with a smaller memory card, deleting and re-downloading digital games as necessary).

This isn't going to be particularly feasible for some games. According to Giant Bomb's Vita Quick Look, the Vita treats the data for a game as a sort of bundle in the GUI. When you delete a downloaded game, it will also delete your saves. So any downloadable title that you want to keep the saves for, you'll also have to keep on your Vita.

Maybe there's a workaround to this, do the PC Vita Content Manager or PS3 Vita integration allow copy/moves of just the sames to/from Vitas?

Trying to sell downloadable contents for more than the over the counter price, is stupid. Grand Theft Auto IV for 20$ according to the article or go to Amazon and get a disk that will not be "no longer supported" out of existence. Trying to sell digital only content to people who you have been removing things from their consoles is dumb. Infinity more dumb is Sony's customers who give money for something that will most likely go away when Sony feels they can get away with it. Please buy your content again. Thx!Making the customers pay 100$ extra to get boned harder...

I hope they do keep screwing up. I dread the day when we can no longer own things. Gone will be DVD/BluRay/Game collections displayed on shelves near your system. Download it now! is nice for instant gratification. For long term collecting it is worthless.

It is greed and stupidity that make up the current Sony downloadable game model.

While I agree with the points made in this article and in many of the comments, I think much of this applies to any system that uses a mix of downloaded and retail games. Vita, psp, ps3, 360... It's the same story for all of them. I don't see it being more critical on one platform vs. another for any particular reason. Flash memory on vita is expensive, sure, but it was (arguably still is) on psp, too. I paid $100 for a SanDisk 1GB stick when I bought my PSP way back when.

This isn't going to be particularly feasible for some games. According to Giant Bomb's Vita Quick Look, the Vita treats the data for a game as a sort of bundle in the GUI. When you delete a downloaded game, it will also delete your saves. So any downloadable title that you want to keep the saves for, you'll also have to keep on your Vita.

For crying out loud. This has been a solved problem on the XBox forever now, how is it possible that Sony did this on a system coming out in 2012?

Back in November or October they changed their terms of service so that you can only download a PSN game to, I think, TWO devices. It used to be FIVE devices, but they lowered it.

Ever since then I refuse to purchase any PSN games that are over $20. Why should I pay full price for a game that I won't be able to use a few years from now because I've "reached my download limit?"

Nintendo Wii's online store is even worse. Buy a game, ONLY play it on that device, never download it again!

These companies need to take notes on how Steam does it. Buy it once, play it on any device as many times as you want, as long as it's only 1 user at a time.

More attention needs to be drawn to Sony's TWO-download policy. It's unreal.

You're allowed to register up to three devices to a single PSN account at one time(it used to be five, iirc). Any more and you have to remove one to make room. A game can only be played on a system that's registered to that account(obviously). I believe that's what you're thinking of.

I see no problem here. If Sony isn't competitive vs phones/tablets, then Sony will fail. Regardless of what happens to Sony, there will be plenty of games for portable devices. Mobile gaming isn't going anywhere.

My expectation is this is the generation where Sony and Nintendo both begin to hemorrhage money out of their mobile divisions. Cheap tablets from China and bigger cheaper smartphones will begin to take more and more mobile gaming, Steam for Android will appear, and by the next generation, Sony and Nintendo's units will be even more marginal improvements over the last then their current ones are, and will finally adapt similar less restrictive and better value digital-only purchases. They will also face competition for the first time from open-branded handhelds like the next generation of GP2X and OpenPandora handhelds, as well as the countless cheap Chinese knockoffs.

As long as they still allow permanent recordable storage of downloaded media I am fine with it, but shit better not start going 'cloud only' or I will retire to the huge unplayed library of past generations and be done with it.

my big problem is that a game that was out over a year ago is still $50 on the PSN or $40 when at retail its $20.

Can't sony hire an 'intern' that would monitor used game sites or shops and then price their older games accordingly? Console makers/developers have to realize that when we go digital we lose any ability to offset the cost of the purchase by being able to later sell it. we're not dumb and there's a reason digital purchases of older games has not done a dang thing; too expensive!

i think sony needs to do a pricing FU to the other competitors and pull off a total undercut pricing scheme for year old games on the PSN. Not like they are losing money when its a digital good that may not even be selling to start with :)

Back in November or October they changed their terms of service so that you can only download a PSN game to, I think, TWO devices. It used to be FIVE devices, but they lowered it.

Ever since then I refuse to purchase any PSN games that are over $20. Why should I pay full price for a game that I won't be able to use a few years from now because I've "reached my download limit?"

Nintendo Wii's online store is even worse. Buy a game, ONLY play it on that device, never download it again!

These companies need to take notes on how Steam does it. Buy it once, play it on any device as many times as you want, as long as it's only 1 user at a time.

More attention needs to be drawn to Sony's TWO-download policy. It's unreal.

I think sometimes we need to just take a step back and stop this obsession with owning content and preserving it for the future. When you pay $10 or whatever for a downloadable game, IMO you are paying for a temporary outlet of entertainment. It's not an investment for the future, it's not a savings bond that matures. It's a piece of software that you likely won't care about playing 4 years from now when you have some new device. When you buy a hamburger for $10, do you worry about what your investment in this burger will be 4 years from now?

These companies need to take notes on how Steam does it. Buy it once, play it on any device as many times as you want, as long as it's only 1 user at a time.

I don't think that will work too well because it would require users to be constantly logged in to Sony's servers to do so. Steam lets you go offline, but there are significant downsides. There are also protections against logging in from different IP addresses. But PCs are generally fixed machines, if I start having issues while traveling I'm going to be very pissed at Sony, if I have to verify that it's my device or spend time trying to find a wifi connection just to play it makes it difficult. In reality I'm likely to have one device and use it, no one upgrades a handheld like their PC and needs to use it again easily.

Plus it'd be easy to get together with 5 mates, share an account and play the same games while in offline mode. Sony need some kind of device restriction in there. It's not like sharing an iTunes or Live account where you're giving away far too much information to do so.

On the store itself, Sony need to take after Apple. Let the developers set their prices and take a cut. The App Store has wound up being like Steam naturally, there are tonnes of heavily discounted games popping up all the time that would encourage downloading over a physical copy. Plus it's good for them, a digital sale isn't going to wind up back at EB Games with a higher markup, so they'll make good use of it.

I wish Sony would get off of their proprietary media bandwagon. Why the hell do we need yet another proprietary format?!? While it makes money for them in the short term, it's a very consumer unfriendly policy. If the user were allowed to use some standard media like SDHC cards, they would be buying more games since more of their budget could be devoted to getting more content. As it is, gouging the customer on hidden hardware costs, just hurts their content sales and ultimately their early market share.

I think the expensive proprietary memory card is intended to placate retail. Users get the ability to download games, retailers get to profit from the cards and decide not to shut Vita out at retail.

I buy both downloadable and physical copies of games, and I always factor in the fact I can resale the physical disc types after I have finished with it in the decision of what I pay. I have no problem going purely digital , but the price would have to come down more than 10% to compensate for the fact that I lose the ability to resell it or lend it.

Hahaha, Steam is only a valid comparison if you look at US pricing only. But the wider regional discrimination tells the real story.

Here in Australia, Steam games are - idiotically - becoming more expensive in some cases than their retail counterparts. This is all the distributors' fault as they set the pricing, but also in part to protect bricks and mortar retail. For example, Ass Creed Revelations is $80 USD, Skyrim is $90 USD and Modern Warfail 3 is $100 USD on Steam. That's not cheaper now, is it?

Until they can get over that it's a digital product with no manufacture costs save its storage space requirement, delivered digitally, around the globe where it costs the same to send bits to no matter where, and that retail is dying, we won't be seeing any decent prices.

Hahaha, Steam is only a valid comparison if you look at US pricing only. But the wider regional discrimination tells the real story.

Here in Australia, Steam games are - idiotically - becoming more expensive in some cases than their retail counterparts. This is all the distributors' fault as they set the pricing, but also in part to protect bricks and mortar retail. For example, Ass Creed Revelations is $80 USD, Skyrim is $90 USD and Modern Warfail 3 is $100 USD on Steam. That's not cheaper now, is it?

Until they can get over that it's a digital product with no manufacture costs save its storage space requirement, delivered digitally, around the globe where it costs the same to send bits to no matter where, and that retail is dying, we won't be seeing any decent prices.

They need to HIRE someone to go to GameStops across the country, or at least do a search of Amazon and look at what the games are selling for in the real world, THEN and only THEN should they set the price of their downloadable titles! The pricing is not just a little out of sync...IT IS TOTALLY BROKEN!!!! If they want to sell people on digital downloads, which CAN NOT be resold, unlike physical media...then they need to price at least CLOSE to what these older games are selling for in the stores!

I think the expensive proprietary memory card is intended to placate retail. Users get the ability to download games, retailers get to profit from the cards and decide not to shut Vita out at retail.

I wouldn't be surprised if part of the reason for the inflexibility of PSN prices is also pressure from retailers.

For the time being, Sony still needs the support of retail outlets to push its hardware, so it can't afford to make them angry.

On the other hand, as you noted, retailers seem quite content to sell iPhones/iPads even though they make nothing on all the sales over iTunes and the App Store. I suspect this has something to do with the huge market for third-party accessories that exists around Apple products.

While we're talking about the pricing issues between downloadable games and retail copies, I'd like to throw in that e-books also frequently sell at much higher prices than their physical counterparts.

As long as we're willing to pay the higher prices for the convenience of digital downloads, they'll be happy to charge us those higher prices...

The dumb thing is they could probably undercut most of these retail bargains by a fair amount and still end up making more money per copy with the downloadable versions (since a large percentage amount the retail cost is due to packaging and distribution of the physical copies).

In the past the B&M stores have threatened to stop carrying the games if they sell for cheaper as downloads, that's why games that have full retail releases always have terrible download prices. It's also why the PC game section at Best Buy is very tiny now and caters almost exclusively to non-gamer games like The Sims and RandomThing Tycoon 6. Until Sony and MS are ready to jump all the way to download only sales, the pricing will probably stay this way, because they need towers built out of console boxes to sell hardware. MS will undoubtedly be the first to make the jump, because they obviously "get it" with Live. Sony obviously doesn't get anything, and who the hell knows what Nintendo will do.

I think sometimes we need to just take a step back and stop this obsession with owning content and preserving it for the future. When you pay $10 or whatever for a downloadable game, IMO you are paying for a temporary outlet of entertainment. It's not an investment for the future, it's not a savings bond that matures. It's a piece of software that you likely won't care about playing 4 years from now when you have some new device. When you buy a hamburger for $10, do you worry about what your investment in this burger will be 4 years from now?

Your analogy is beyond flawed. Food is and always was a consumable. it was never expected to remain in a usuable form once consumed.

Games can be directly compared to readable press however. A newspaper, I do not expect to retain value from, cost: free to $1.00, usually around the 25 cent mark. A book, I expect to re-read and enjoy again at a later time, and so do the people providing the books expect you to. Therefore cost: $10-40 depending on paperback or hard-bound.

If suddenly books began to erase themselves as you read them, and the publisher told you that this was for your benefit, and look you save 20% off the price, how well do you think that would go over? That's the problem with downloadable media, and the slippery slope of making disposable games. They arent near at the price point of newspapers, yet want that level of disposability for their profit and your loss.

The game publishers love that you've drunk the kool-aid, they applaud that you are posting stuff like this. It makes them more money, but leaves you, and the rest of us, poorer in the end.

Tell this to all the people of my generation who are spending hundreds of dollars on gaming systems and games they played as a kid. I've owned nearly every gaming system since 1980 and still get replay out of my old NES, SNES, Saga, and occasionally the 2600 and Colecovision. My aged but functional systems, ROM based cartridges, will never be come unusable because Atari or Nintendo decide to discontinue support for them. Even my PS3s are set up with one to play online receiving all the firmware updated, and one that remains offline in its original out of the box state. I generally play games on the offline system unless my son wants to play Little Big Planet with his friends, or I just feel like making 14 year olds cry in Black Ops. There is nothing more infuriating than coming home from work, sticking in Mortal Combat for the little post work stress relief only to have to wait 30 minutes until my system updates itself, or the latest game patches install.There are simply too many negatives to cloud and stream based services. For one, Sony will have too much control over how you use your games. If they want to discontinue support for it, well there goes your game. They ban your account for something stupid, there goes every game you ever paid for, not to mention the device MAC address probably being blacklisted as well, so that system will never be able to connect to their servers EVER. Now you bvd to but a new device and repurchase all your games. Did I mention Terms of Service? Read the one from PSN next time you have a day to kill, you'll find all kinds of goodies in there about how you don't own your game, but instead are purchasing. license to use it for about time period. And then there's the clause that essentially is you giving up your rights to ever file suit against Sony in court. Too many to name.The biggest pitfall to cloud based gaming that no one has even mentioned, including the Author of this article is bandwidth usage. With games getting bigger data-wise, and ISPs getting stingier with their bandwidth caps there will be serious problems. The game mentioned in the article was 3.2 GB in size, but what about in a couple of years when the platform reaches its full potential and the average game size is 20GBs? Some ISPs allow 250my GBs per month in the US, where most are around the 75 - 150 range. Factor in the ridiculous amount of packets sent and received in a six hour period of playing a MMO game and everything else in your household taking huge chunks of bandwidth such as PCs, Tablets, TVs, pretty much every device in common use, and with multiple household users and there is a crisis. How about those movies and TV shows you stream from Netflix ? They demand huge chunks of data. Listen to Pandora or Spotify? Add them to The list. And in the meantime ISPs are shrinking their monthly data allowances. I haven't even hit on the Mobile ISPs. I pay $40 per month for unlimited data usage from Verizon. Yeah unlimited until I hit 5 GBs of data!!!! Yup that's FIVE GBs!!!! With the mobile capabilities of Vita, how quick will you hit that? Enough said. I've only scratched the surface and considering I'm typing this on my DROIDX, I'm beginning to worry about the size of this message. :P

If only Apple would come out with a snap-in shell that included a couple dual analog sticks, 4 buttons and a couple yoke triggers. Actually, EA or Activision could do it as well; charge $60 for it and include a copy of MW3, Battlefield, BlackOps, or whatever. I'd buy it yesterday.

I am going to buy a Vita because I want to play FPSes on a high-def handheld. And for no other reason.

I'm down on these digital stores for consoles and portables because a decade after the console is gone I doubt the company will still have the servers up to re-download your game. At least some PC digital stores allow backup to disc. Though on the other hand many PC publishers saddle their games with ridiculous DRM and will probably take down the DRM server eventually.

While most people won't care about the game 15 years later, there's a large niche of gamers who do like to play old retro titles. I would prefer to not have to pirate a game I bought ages ago to replay it. I'm also not re-buying a game just to play it re-released for a new system when my original copy should still work fine. I still occasionally play my old consoles going back to the NES. I'm talking about the actual console and original cartridge/disc, not emulated.

What's interesting about the archival issue is how much ridicule this draws. I remember bringing up the issue when Steam was just becoming extremely popular and I was flat out mocked for it. This isn't to say I'm down on Steam, it's flexible pricing and ability to backup your games is hard to argue with. But even developers seem to treat later access to their games as a non-issue.

Kyle Orland / Kyle is the Senior Gaming Editor at Ars Technica, specializing in video game hardware and software. He has journalism and computer science degrees from University of Maryland. He is based in Pittsburgh, PA.